The Empire Strikes Back As the antitrust trial slogged into the holidays, Microsoft and its CEO tried to make nice and plead their case to the press. But something didn't quite ring true.
By Joseph Nocera

(FORTUNE Magazine) – WEDNESDAY, DEC. 2: Weird day today. In Washington, the 150 or so people attending the Microsoft antitrust trial are watching the latest installment in our favorite video series: Billg Gives a Deposition (Billg is Bill Gates' E-mail moniker). With a witness from Sun Microsystems, James Gosling, due up next, the government is showing the portion of Gates' testimony that relates to Sun and its Java programming language, which poses perhaps the greatest current threat to Microsoft's Windows monopoly. Not, of course, that Gates will ever admit as much. As usual, Gates in deposition mode is a frightful sight, argumentative, petulant, and forgetful. From the spectators, there are the usual chortles; from the judge, the usual headshaking; from the Microsoft hands, the usual stiff upper lip. The low point comes when Gates and David Boies, the government's lead prosecutor, engage in a hilarious who's-on-first exchange over the meaning of the phrase "pissing on," which is contained in a Microsoft E-mail. It takes Boies a good ten minutes to get Gates to concede that the phrase is not, as Boies sarcastically puts it, "some [Microsoft] code word that means saying nice things."

Around the same time we're watching this surreal debate in Washington, an audience of roughly similar size in New York City is listening with rapt attention to the other Bill Gates--the Bill Gates who is smart, thoughtful, and on top of everything going on in the high-tech universe. This is the Bill Gates we think of as, well, Bill Gates. He has come to New York to give away $100 million to promote vaccination in the Third World--shades of Michael Milken taking ghetto kids to Shea Stadium?--and to make a speech at the Manhattan Institute, a conservative think tank. Here, Gates is among friends. Introducing the Microsoft CEO, former Citicorp Chairman Walter Wriston compares him to past visionaries who also endured attacks from their governments.

Gates' speech is completely forgettable, but who cares? The crowd has come to embrace him, and his every gesture suggests that he finds comfort in their embrace. When a man asks him about the antitrust case, the questioner seems almost embarrassed to be raising so sore a subject. Gates pauses, as if contemplating this topic for the first time. "Well," he begins, "we're in a very, very competitive business, so it's ironic to have to have the distraction of a government lawsuit." He adds that Microsoft actions--such as integrating its browser into Windows--are "pro-consumer" and that the government is seeking "to limit innovation." Then, with a rueful, self-pitying shrug, he concludes, "A lawsuit of this kind is something that no one should have to go through."

Late afternoon. Back at the federal courthouse in Washington, word is spreading that a jury has reached a verdict in another big case: the Mike Espy trial. Espy is the former Secretary of Agriculture who has spent the last few months in a courtroom two floors above us, defending himself against charges that he accepted sports tickets and other freebies that totaled about $33,000. To get here, Espy suffered through a four-year investigation by an independent counsel. I make my way upstairs to watch the verdict come in.

As he waits for the jury to enter the courtroom, Espy is a wreck. His arms are folded tightly to his body; his jaw is clenched; his eyes are darting everywhere. In walks the jury. Espy stands to face them. The tension is nearly unbearable. The judge asks the forewoman for the verdict on the first count. "Not guilty," she replies. The second count. "Not guilty." When she says "Not guilty" for the thirtieth time, the courtroom explodes in relief. Several of Espy's relatives begin to cry uncontrollably. Espy, cleared on all counts, hugs his lawyers and then his family. They walk out of the courtroom in each other's arms. And all I can think is: Here is a man who can really say that no one should have to go through the kind of lawsuit he's been through.

THURSDAY, DEC. 3: If you didn't know that James Gosling was a computer geek, it would take you, oh, five seconds to figure it out. A gentle, soft-spoken bear of a man, with a long, flowing mane of hair and a bushy beard, Gosling arrived in court on Tuesday wearing a T-shirt, a leather jacket, and Birkenstocks. By yesterday, his first day on the stand, he had upgraded to a shirt and tie, though he hadn't made it all the way to a suit; if you looked closely, you could see that his blue jacket didn't match his slightly bluer pants. When Tom Burt, the Microsoft lawyer cross-examining him, asked Gosling what his title was, the witness looked slightly baffled. "I don't really know," he replied--and there wasn't a soul in the courtroom who doubted him.

His title, actually, is chief scientist of the Java software division. (He is also a Sun "fellow.") What he is most famous for within Sun, and the reason he is a government witness, is his creation of the Java programming language. Ah, yes, Java: the only computer language with its own slogan, "Write once, run anywhere."

Of course it is that very slogan--the promise that a program written in Java can run equally well on any operating system--that Microsoft found so threatening. Or so alleges the government, which claims that Microsoft undertook a series of anticompetitive actions, designed to "pollute" Java. That is, Microsoft set out to make a version of Java that would work beautifully on Windows, but wouldn't work at all on other operating systems. In creating its own Java "dialect"--and persuading programmers to use that version--Microsoft would defuse the Sun threat and save the Windows monopoly.

Microsoft, needless to say, heatedly disputes this allegation, claiming that it merely gave developers "more choice." The dispute is so fierce that we all expected serious fireworks when Gosling took the stand. And yesterday there were some. Late in the afternoon, Burt introduced a series of inflammatory Sun E-mails. In one, for instance, Gosling wrote to a Sun executive to protest the company's imminent decision to license Java to Microsoft. "Nearly every licensee begins by saying, 'We see Java as a way to attack the evil empire,' " Gosling wrote. "This could scare the licensees shitless." (Burt: "When you are referring to the evil empire, you are referring to Microsoft, right?" "Yes," replied Gosling with a flicker of bemusement.) Burt also read from a news article that claimed that after Sun CEO Scott McNealy--surely the planet's most vociferous Microsoft critic--saw his first Java demo, he raced back to his computer and dashed off an E-mail that read, "Charge! Kill Hewlett-Packard, IBM, Microsoft, and Apple all at once." Outside the courtroom, Microsoft spokesman Mark Murray intoned darkly that the evidence showed that Sun was at the center of "a secret, detailed plan" to destroy Microsoft.

Today, though, there aren't even sparks, much less fireworks. Burt's questions are so highly technical that the courtroom is in a state of near stupor. (The room is also very hot, which doesn't help.) Judge Thomas Penfield Jackson is visibly struggling to stay awake. Even Gosling seems bored to tears. Less than an hour into the afternoon session, Jackson calls an unprecedented half-hour recess. We're guessing he needs a nap.

As we mill around the courtroom, a Reuters reporter asks Boies about the old IBM antitrust case. Boies was the company's chief litigator during its 13-year fight with the government--he was 33 when the actual trial began in 1975--and it made his early reputation. He loves telling IBM war stories: "The judge in that case ruled that all the deposition testimony had to be read into the record. So you'd have days on end when the only thing that happened was lawyers reading depositions out loud. It got so bad that the judge stopped coming." As he talks, the crowd around him grows, and the laughter gets louder. "I had a client who wanted to see the IBM case, so I brought him to court one day. He walks in, sees what's going on, and says in this very loud voice, 'Where's the judge? Where's the judge?' "

Listening to Boies, the reporters all have the same thought: However dull this trial gets at times, it could be much worse! When Judge Jackson emerges from his chambers, we're actually glad to have him back.

MONDAY, DEC. 7: It's nothing anyone will say out loud, but the Microsoft forces have become deeply frustrated with the way the press is covering U.S. v. Microsoft. With the trial about to enter its eighth week, Microsoft is absolutely convinced it is winning in the courtroom. It believes it has proven beyond all doubt that its supposedly anticompetitive acts have been good for consumers--thus making them legal under antitrust statutes. It believes it has shown that the software industry is highly competitive. And it believes that the Gates deposition is a complete sideshow, utterly devoid of legal merit, whose only purpose is to inflame the press.

Yet despite everything that Mark Murray and his fellow Microsoft flacks have done--and they've done plenty--the press refuses to see it their way. Reporters continue to report on the Gates deposition video in all its gruesome detail. Worse, the press has become increasingly inured to Microsoft's arguments, giving them short shrift in their accounts of the trial. My own sense is that the company's shrillness has cost it some credibility. After a while, the incessant spinning goes in one ear and out the other.

On the other hand, if Bill Gates were to tell us personally that the government's case is worthless, that would be impossible to ignore. That would be news. Which explains why today, Pearl Harbor Day, Microsoft is trotting out its ultimate weapon. Last night we got word that the company would hold a noontime press conference--and that Gates would make an appearance, via satellite. He would even take questions. It's the perfect moment for Microsoft to strike back. With no court today, the press conference is guaranteed to attract plenty of coverage.

Indeed, the room is packed when I arrive a little before noon: at least 40 reporters, swarms of Microsoft flacks and executives, a dozen cameras, two big television screens flanking the "in-person" Microsoft speakers, general counsel William Neukom and the company's chief litigator, John Warden. There's excitement in the air. We're going to hear from Gates himself!

First, though, we have to hear from Neukom and Warden. They don't say all that much that we haven't heard before. Neukom throws out two small news nuggets, the more interesting of which is that the company plans to ask Judge Jackson to let Microsoft lawyers conduct discovery into the recently announced AOL-Netscape merger. Neukom strongly implies that the companies--both of which have testified against Microsoft--are part of a concerted plot to bring down the software giant, a nefarious conspiracy orchestrated by its many envious competitors.

Warden makes the quintessential Microsoft pitch: "The central themes of the government's case have been undermined," he exults, "or rather, I should say, demolished." He then goes on to make explicit something Microsoft has long implied: the company's belief that the government is waging a public-relations war rather than a legal war. "Their real focus," he says, "is an attempt to influence public opinion against Microsoft." He mentions, of course, the Gates deposition excerpts as Exhibit A: "What possible relevance do they have to a Sherman antitrust case?" And with some heat, he denounces Boies for speaking to the reporters, something the prosecutor does twice a day at the spin sessions. Warden labels the practice "amazing."

For the press corps, this is all a little hard to swallow. The truth is, Microsoft has been far more heavy-handed in its press relations than the government. And why is it a sin when Boies talks to the press, but not when Neukom and Warden do?

But never mind. With the preliminaries out of the way, it's time for the main event. The two big TV screens come to life, and there he is, Bill himself, looking for all the world like a President about to address the nation. Dressed in a stylish brown suit, he sits before one of those "backdrop" bookcases full of fake first editions. As Gates begins, it quickly becomes clear that he is, indeed, delivering a speech, which he reads haltingly from a teleprompter. He stops several times to sniffle. He seems to have a cold.

Mostly, he recites the same lines his PR people have been reciting for weeks. But they have far more potency coming from America's richest man. "One of the great ironies of this case is that the government is trying to increase the cost of what consumers have to pay for browsers," he says. "In the software industry, success today is no guarantee of success tomorrow," he says. "Unfortunately, the government is listening to an alliance of IBM, AOL, Sun, and Oracle," he says. If he's not the surly Bill Gates of the depositions, he's also not the chipper Bill Gates of the Manhattan Institute. For us, he's trotted out yet another persona--Bill Gates, misunderstood victim.

Eventually, he takes up the issue of his deposition. Nothing has hurt Microsoft's credibility more than its fierce insistence that Gates acquitted himself well during his three-day deposition, when the whole world knows otherwise. But Gates pushes this line even further than his PR minions. In effect, he says that Boies is the one who should be blamed, because the prosecutor threw him trick questions. "I expected him to ask me about the issues of the case," Gates says. "He did not ask me these things. Instead he would put a piece of paper in front of me and ask me about words from E-mails that were three years old." He also says that the government was never supposed to be able to show the video in court--thus implying that either the feds or the court double-crossed him. Amazingly, he even tries to defend his Clintonesque responses.

After speaking for about 20 minutes, he takes only two questions. Both are about the deposition. When he tries to sign off the reporters hoot in anger--so he agrees to take one more question. Once again, it's about the deposition. Asked if he would handle the deposition differently if he had to do it all over again, he replies, "Would I smile for the cameras more? You bet. But this case isn't supposed to be about that." Then he gives the assembled reporters their lead for the next day, by charging that Boies "was out to destroy" Microsoft and him. Having gotten that off his chest, he signs off.

Warden and Neukom take a few more questions--when asked about the possibility that Gates might be called as a rebuttal witness for Microsoft, Neukom doesn't rule it out--and the press conference ends. As I head for the exit, I bump into Mark Murray. "Three questions," he says in a tone of world-weary dismay. "And every one is about the deposition."

TUESDAY, DEC. 8: At the lunch break today, as I head downstairs for the midday spin session, I bump into a young Justice Department flack. "David's not going to be talking to the press today," she announces. "Why not?" I say with a start--wondering if perhaps Boies feels chastened by all the Microsoft criticism that was hurled his way yesterday. "It's raining too hard," she replies sweetly.

WEDNESDAY, DEC. 9: It's official. The Microsoft trial is in a serious slump. As lawyers know, this is often the rhythm of a trial: crackling with excitement at the beginning and the end, with dead spots in between. We're in the dead zone now.

This bad patch really began the week before Thanksgiving, with the appearance of a pompous academic named Frederick Warren-Bolton, who was grilled by Microsoft for a mind-numbing five days. He would have been on the stand longer except that Judge Jackson lost his temper and decreed to the lawyer cross-examining him: "This has got to stop!"

Then, for a day and a half this week, Gosling's cross-examination was interrupted to accommodate the schedule of another academic, an Internet pioneer named David Farber, of the University of Pennsylvania. Farber, thankfully, was willing to crack a joke now and again. But he spent both days answering endless variations of the same question: "What is an operating system?" In the software industry, this is a question of almost theological import--and it's a damn interesting one at that. It's also, of course, an important issue in the trial, since so much of the government's case revolves around whether Internet Explorer is truly part of the Windows operating system, or whether it is a thing apart. But there are only so many times you can hear the same question asked and answered before your brain starts to melt.

Now it's Wednesday afternoon, and Gosling is back. But the torpor continues. Reporters have stopped taking notes. The judge calls recesses hourly. The spectator seats are less than half full. Late in the afternoon, though, Microsoft throws a new Sun E-mail into evidence. Purporting to show the mistrust between Sun and Netscape, it concludes with these memorable lines: "No agreement with Netscape is worth the ink it's written with. Go sign a deal with Saddam Hussein. It has a better chance of being honored."

What does this E-mail have to do with the case? Who knows? Who cares? The judge is smiling. Reporters are furiously scribbling notes. For a moment, the trial has returned to life.

THURSDAY, DEC. 10: This is Gosling's last day as a witness, and it's a pretty good one. All morning long, Burt, his cross-examiner, has been hammering the witness with a contentious line of questions aimed at showing that Microsoft wanted to cooperate with Sun on issues relating to Java--but that it was Sun that consistently rebuffed Microsoft. The fourth or fifth time he is asked the question, Gosling responds with his single best line: "Our view was that when Microsoft was holding out its hand, there was a knife in it, and Microsoft was asking us to grab the blade." Then in the space of an hour in the afternoon, Gosling mentions four times that a judge in San Jose has issued a preliminary injunction against Microsoft in Sun's lawsuit, which alleges that the software giant violated the terms of its Java licensing agreement. Every time he does so, Burt sharply reprimands Gosling. Gosling just smiles benignly.

The afternoon is pretty funny, because it becomes a game of will-he-or-won't-he-finish? If Gosling doesn't conclude this afternoon, he and the other members of the Sun contingent will have to make a third trip to Washington to be in court Monday morning, something they're all desperate to avoid. Still, the Sun programmer just can't stop talking, and every time he gives one of his elegant but lengthy answers, the Sun people roll their eyes. But by late afternoon it is obvious that he will be done today, and our attention turns to the judge, who has begun to ask a few last questions. One of them catches everyone by surprise. Couldn't one argue, he muses, "that what Microsoft did was grasp the significance of the work you were doing [on Java] and then [produce] a better version...and they simply couldn't wait for you to catch up?"

This is startling because it is the first time in the two-plus months of this trial that Jackson has said anything even remotely pro-Microsoft. And when the session ends, it's the only thing reporters want to ask Boies about at the spin session. In response, Boies does something that the Microsoft spinners never, ever do: He gives the other side some credit. "I think the judge was impressed with a number of points Microsoft made," he begins. "But I also think he was impressed with the answer." Actually, Gosling's answer was fairly incoherent, but never mind. By simply conceding the obvious, Boies has made himself enormously credible. Someday, maybe Microsoft will figure this out.

When the prosecutor is finished, Gosling steps up to the mike to say a few words. Five or six questions into his mini-press conference, someone asks what kind of remedy he would suggest if Microsoft loses the case. "Aw, I don't know," he says. Then, in a flash, it comes to him, and he breaks into a devilish grin. "They should just issue cream pies to all the software developers, along with a plane ticket to Redmond," he says.

MONDAY, DEC. 14: Remember Gosling's line about the knife and the blade? It made all the papers last Friday--which, it turns out, is exactly what Gosling had hoped. In fact, Gosling is telling me now over the phone, he devised that little sound bite specifically to generate some press. "I had been getting frustrated with the fact that the press was only printing what Microsoft said, so I decided to throw in a moderately colorful comment--and people actually used it," he says with no small delight.

And the time when Gosling kept mentioning the preliminary injunction against Microsoft? Not happenstance. "My lawyers kept telling me that it would be a useful thing to bring up"--so as his frustration with Burt's questions grew, he decided to go for it. He laughs when I remind him that Burt kept telling him he was not an expert on the contract and therefore not qualified to speak on the subject. "Well," he says, "as far as I was concerned, he was asking for it," replies Gosling. "He kept asking me questions about the contract." Besides, Gosling adds, "I've read the judge's decision, and it's a pretty clear document. On the face of it," he adds, "I probably should have said, 'I don't know.' But nobody does that in this trial."

He is right about that, and it's one of the odder aspects of the trial. For both the lawyers and the witnesses, anything goes: No question or answer is too far afield for the judge to rule it out of bounds. Testimony involving not just hearsay, but multiple layers of hearsay, has been routinely admitted. Indeed, great swatches of Gosling's cross-examination required him to rely on hearsay, since he was continually asked about E-mails he hadn't received, meetings he hadn't attended, and strategy sessions he knew about only after the fact. Burt's questions often seemed aimed more at attacking Sun as an institution than Gosling as a witness. "I guess the thing that most amazed me," he says, "was that Microsoft asked me very few questions about my actual direct testimony."

The experience, he says, was both draining and time-consuming; he spent most of the fall preparing for both this case and Sun's lawsuit, in which he also testified. But he's glad he did it. "I'm proud to have been a part of this," he says. "I think the government is completely right"--though he worries that the case is too narrowly framed around browsers and not enough around what he views as Microsoft's "slime" tactics.

Gosling says he never hesitated once he'd been approached about being a government witness. But then, working for Microsoft's archenemy, he's in a unique position. "It's really been hard for the government to get witnesses to testify," he says. "I've talked to a lot of these companies, and I know that any executive who agrees to do this is putting his career on the line. If you're a witness in this case and Microsoft wins, you're screwed."

TUESDAY, DEC. 15: Let's go to the videotape one last time. Boies has just handed Gates a 1997 E-mail the Microsoft CEO authored. The prosecutor offhandedly mentions that at the top of the document Gates has typed: "Importance: High."

"No," interrupts Gates.


"No, I didn't type that."

So who, Boies asks, typed in "High"?

"A computer."

The courtroom erupts in derisive laughter.

WEDNESDAY, DEC. 16: We're winding down for the holidays. The government has just two witnesses left--an executive from Intuit and an economist from MIT--but neither will appear until the new year. For the past few days, Boies has been filling the time by playing bits and pieces of some 19 depositions he wants to get into the record, including a final three-hour portion of the Gates video.

But it is obvious that everyone's attention is waning, including Judge Jackson's, and we all just want to go home. One of the sketch artists has drawn a Christmas tree, which is being displayed on the big television screens in the courtroom.

So, after lunch, the two sides meet with Jackson in chambers and agree to throw the rest of the depositions into the record without playing them in court. The unplayed depositions include that last big chunk of Gates'--which means we may well have seen the last of the Bill and David show.

As Boies strolls out of the courtroom, a reporter asks him why the government agreed to stop playing all the depositions in court. He starts laughing. "Have you been in there lately?" he asks. "On Broadway, they close the play when the audience leaves."